Tuesday, July 30, 2013

Who is Steve Keen? What is the NAR? And why am I wondering
whether or not I agree with Steve Keen?

Steve Keen is an Australian economics professor, author of a
book entitled ‘Debunking Economics’. His blog, ‘Steve Keen’s Debtwatch’, is
dedicated to analysing ‘the collapse of the global debt bubble’. The NAR refers
to the North Atlantic Recession, sometimes referred to as the Great Recession,
that followed the GFC. I am wondering whether or not I agree with Steve Keen because
of a comment on Jim Belshaw’s blog last Sunday. Jim wrote:

‘The second part of Winton's post focused on Irving Fisher's
views is, if I interpret the argument correctly, very similar to views
expressed by Professor Keen. Essentially, a key part of the problem was the
combination of levels of private debt with income and price variations.’

My immediate response was to question whether it might be
possible that I could express views similar to those of Professor Keen. While my
views on economics have strayed somewhat from neoclassical orthodoxy in recent
years, I still consider that the concept of equilibrium provides a useful
starting point for economic analysis. Steve rejects all conventional neoclassical economics.

If my understanding is correct, there are two main elements
involved in Steve’s views about the causes of the GFC and the following
recession: Minsky’s financial instability hypothesis; and the concept of
endogenous money creation.

Minsky’s financial instability hypothesis involves the idea
that a growing economy is inherently unstable. Investments are initially conservatively
financed, but it gradually becomes evident to managers and bankers that greater
profits can be made by increasing leverage. Investors and bankers come to
regard the previously accepted risk premium as excessive and to evaluate
projects using less conservative estimates of prospective cash ﬂows. The decline
in risk aversion sets off growth in debt, growth in investment and growth in
the price of assets. The euphoria is eventually brought to an end as rising
interest rates and increasing debt to asset ratios affect the viability of many
business activities. Holders of illiquid assets attempt to sell them in return
for liquidity. The asset market becomes ﬂooded, panic ensues, the boom becomes
a slump and the cycle starts all over again. (That is an abridged version,
excluding Ponzi elements, of a summary which Steve provides in his paper: ‘A monetary Minsky model of the Great Moderation and the Great Recession’).

The concept of endogenous monetary creation involves the idea
that banks create credit in response to demand. If a bank lends me money, my
spending power goes up without reducing anybody else’s. So, bank lending creates
new money, and adds to demand when it is spent. From this perspective, ‘aggregate
demand is income plus the change in debt’. (My training in economics and
national income accounting makes it difficult for me to understand why or how
that can be so. Nevertheless, let us proceed.) If my understanding is correct,
Steve is arguing that quantitative easing does not increase the money supply, because
banks don’t increase lending when central banks purchase bonds from them. (See Steve’s article: ‘Is QE quantitatively irrelevant?’).

My objection to the first element arises because I don’t
understand why a growing economy should necessarily be unstable. In my
view, it is necessary to introduce into the analysis a ‘too big to fail’
policy, or something similar, to explain why banks have a tendency to take
excessive risks. I have attempted to outline the regulatory issues involved in a previous post:

‘Governments seem to have managed somehow to get us into a
vicious cycle where fears of contagion have led them to encourage major
financial institutions in the believe that they were too big to fail, while the
belief that governments would bail them out has led major financial
institutions to take excessive risks. If we can't let big financial
institutions fail when they become insolvent, perhaps the next best option is
to find the least cost way of regulating them to make it less likely that they
will become insolvent’.

My objection to the concept of endogenous monetary creation
is that it flies in the face of the reality that monetary policy can increase
and reduce the rate of growth in nominal GDP (aggregate demand). It would make more sense to explain the fact that money creation through quantitative
easing did not result in an immediate increase in bank lending in terms of
funds being used to meet demands for liquidity (or repair balance sheets) than
to redefine the concept of money in order to claim that the money was not
created.

In my view Scott Sumner is on the right track in arguing
that nominal GDP level targeting (along a 5% growth rate) in the United States
before 2008 would have helped greatly reduce the severity of the Great
Recession:

‘One reason asset prices crashed in late 2008 is market
participants (correctly) saw that the Fed had no plan to bring the US economy
back to the old nominal GDP trend line’ (See: ‘A New View of the Great
Recession’, Policy, Winter 2013. The
article is gated, but Scott has expressed similar views on his blog.)

The idea of targeting nominal GDP, to bring it back to the old
trend line seems to me to be similar to Irving Fisher’s advocacy of reflation,
as discussed in my post about balance sheet recessions.

So, coming back to the original question, I agree with Steve
Keen that debt is important in explaining the GFC and the NAR, even though I have
a very different view about the way economic systems work.

Tuesday, July 23, 2013

This question arose from my reading of ‘The Two Tipperarys’,
by Donal Murphy. The book is primarily about the division of Tipperary into
north and south counties in 1838. It was recommended to me as background reading
on the life and times of people living in Tipperary in the 19th
Century. (I have some ancestors who came from that part of the world.)

Tipperary was apparently relatively peaceful during the Butler
palatinate from c. 1200 to the early 1700s. By the mid 1830s, however, the
county had established an unrivalled reputation for lawlessness. In 1836, the
number of people committed for trial in Tipperary amounted to about 1.4 per cent
of the population of that county, whereas the corresponding percentage for
Ireland as a whole was 0.3 per cent.

After comparing the data of numbers of people committed for
trial with data on the numbers of crimes reported, the author comments:

‘A crude comparison between the two sets of ratios seems to
suggest that a higher number of persons per crime was also a Tipperary
phenomenon – perhaps an early indication of a co-operative spirit in the county’.

There is also some evidence suggesting that a greater amount
of crime went unprosecuted and unpunished in Tipperary than other counties. At
the time, one judge described ‘a system of terror’ creating greater difficulties
in administration of justice in Tipperary than in other counties. Another
reason for many victims to be reluctant to report crimes would have been their limited
faith in the administration of justice.

Donal Murphy does not devote much space to discussion of the
causes of the high crime rate in Tipperary because it isn’t relevant to the
main theme of his book. He suggests distress and famine as a contributing
factor, with a crop failure in 1834 being described as a preview of the Great
Famine which occurred a decade later. He also mentions ‘the flourishing state
of faction fighting, violence for the sake of violence’. This involved personal
and community vendettas erupting in gang warfare at town fairs. A variety of
groups are mentioned, including the Caravats and Shanavests.

My search for more information about the Shanavests and
Caravats led me to Paul Roberts’ contribution entitled ‘Caravats and
Shanavests: Whiteboyism and Faction Fighting in East Munster, 1802-11’,
published in ‘Irish Peasants, Violence
and Political Unrest 1780 – 1914’, edited by Samuel Clark and James
Donnelly. Whiteboyism is a generic term referring to outbreaks of agrarian
terrorism between 1760 and 1845, primarily aimed at redressing economic
grievances of poor farmers and rural labourers. This action was mainly directed
against the rural middle class who were their immediate landlords, as a result
of various forms of subletting.

The Caravats have their origins as primarily a Whiteboy
movement and the Shanavests as primarily a middle-class anti-Whiteboy movement.
Both groups were known by different names in different areas.

Paul Roberts suggests that Caravatism was the product of the
wartime agricultural boom of 1793-1813, which increased demand for food and
resulted in higher rents. This benefited the middle classes, who had long
leases, and disadvantaged the poor, who were not protected by leases. The Caravats
used terror against better-off farmers and other middle-class elements in an attempt
to guarantee the poor access to land and food. Some of their gangs were also involved
in other criminal activities such as highway robbery.

The Shanavest movement had links to nationalist political organizations,
but it arose in direct response to Caravatism. Its activities included murders
and assaults directed against prominent Caravats. Apparently, the political and
religious alienation of the middle class from the state inclined them to look
to their own resources, rather than to rely on the state for protection.

The activities of the Caravats and Shanavests began in the
south of Tipperary, but by 1809-10 had moved to the north of the county and to
other counties. The authorities intervened by increasing troop numbers, holding
a special commission and arresting forty men involved in the disturbances. This
brought the Caravat-Shanavest outbreak under control, but the two movements seem
to have lived on with open feuding being pursued under a series of regional
names.

Paul Roberts suggests that the economic basis of the feud
would have weakened over time as nationalism gained ground among the poor
between 1815 and 1845, and the worsening economic situation of the rural middle
class after 1813 created fertile soil for cooperation across class divisions.
That would explain why Donal Murphy describes the faction fighting in the 1830s
as ‘violence for the sake of violence’.

In writing about ‘the good society’ on this blog and
elsewhere, I have put a great deal of emphasis on the need for people to be able to live in peace with one another in order to enjoy the benefits of economic and
social progress. The history of Ireland in the early part of the 19th Century shows just how difficult it can be for people to live in peace when different groups perceive
that others are treating them unfairly.

Wednesday, July 17, 2013

I have been feeling a strong urge to write about the
economic policies of the former government of our resurrected prime minister,
Kevin Rudd. Whenever I begin to write on this topic, however, what comes to
mind is my grandmother’s advice that if you haven’t got anything nice to say,
perhaps you shouldn’t say anything. It might be churlish of me to attempt to
remind people that Kevin – whom so many people seem to revere as much now as in
2007 – has a record of achievement that is somewhat less than perfect.

Fortunately, not everyone has such qualms and some excellent
articles about the economic policies of the Rudd government have appeared in
the media over the last week or so. The best newspaper article I have read so
far is one by Henry Ergas, entitled ‘Rudd’s Real Record’, published in The Australian last Saturday (July 13,
2013). Ergas reminds us, among other things, that in 2009 Rudd mounted a massive
scare campaign about the severity of the GFC in an attempt to justify a splurge
of poor quality government spending.

I recall how Janet Albrechtsen suggested in The Australian at the time that the GFC
provided Rudd and his treasurer, Wayne Swan, with an opportunity that they were
only too eager to grasp:

‘The Rudd Government finds itself at a very fortunate
juncture. As Rudd’s treatise in the present edition of The Monthly reveals, he
can blame capitalism for the coming government extravagance funded by
taxpayers. Prepare for Rudd’s hubris-filled pitch on how he “saved” capitalism
and why you had to pay for it.’

Whether we are prepared or not, we are now hearing Rudd’s
hubris-filled pitch:

‘As you know, here
in Australia, we deployed a national economic stimulus strategy, timely
targeted and temporary, which helped keep Australia out of recession, kept the
economy growing, and kept unemployment with a five in front of it – one of the
lowest levels in the world.’

The hollowness of the claim by Rudd and Swan that the fiscal
stimulus pulled Australia though the GFC has been demonstrated many times. For
example, in an article entitled ‘Wayne Swan’s legacy of unrivalled incompetence’
in yesterday’s Financial Review (July
16, 2013), John Stone, former secretary to the Treasury, points out that the
hubris of Rudd and Swan overlooks the strength of Australia’s fiscal position
prior to the GFC, the role played by monetary policy, the underlying strength of
Australia’s banks and the growth in China’s demand for our minerals.

John Stone’s article also raised the question I am intending
to address here about balance sheet recessions. Stone suggests that the
Australian Treasury had erred in seeing 2008-09 as another cyclical recession
like that of 1991-92, rather than as a ‘balance sheet recession’ of the kind
that Irving Fisher wrote about in an Econometrica
article in 1933.

In my efforts to overcome my ignorance about the characteristics
of a balance sheet recession I have managed to find an ungated copy of Irving Fisher’s article. Fisher suggested that in ‘great booms and depressions’ … ‘the
big bad actors are debt disturbances and price level disturbances’, with other
factors playing a subordinate role.

Fisher argued that it is the combination of
over-indebtedness and price deflation that causes the depression:

‘When over-indebtedness stands alone, that is, does not lead
to a fall of prices, in other words, when its tendency to do so is counteracted
by inflationary forces (whether by accident or design), the resulting
"cycle" will be far milder and far more regular.

Likewise, when a deflation occurs from other than debt
causes and without any great volume of debt, the resulting evils are much less.
It is the combination of both—the debt disease coming first, then precipitating
the dollar disease—which works the greatest havoc.’

Fisher suggested:

‘it is always economically possible to
stop or prevent such a depression simply by reflating the price level up to the
average level at which outstanding debts were contracted by existing debtors
and assumed by existing creditors, and then maintaining that level unchanged’.

That seems to me to be similar to the rationale for the quantitative
easing policies adopted by central banks in recent years, following the failure
of fiscal stimulus efforts. Lars Christensen, a market monetarist, has written more extensively about this similarity on his blog.

John Greenwood’s analysis, conducted in the spirit of Irving
Fisher, suggests that some balance sheet repair has occurred in recent years in
the countries most affected by the GFC, with greater progress having been made
in the US than in the UK and least progress having occurred in the eurozone.

Postscript:

An article by Max Walsh in today’s Financial Review (July 18, 2013), entitled ‘Rudd’s demands could
exceed all expectations’, is another excellent article about the implications
of the economic policies of the first Rudd government. Walsh refers to Rudd’s essay
in The Monthly (February 2009) in which
he sought to differentiate the economic ideology of the two major political parties
in Australia. As might be expected, Rudd sought to portray his political
opponents as extreme proponents of free market ideology, but he also portrayed the
Labor party as being wedded to interventionism.

Kevin Rudd wrote: ‘Labor, in the international tradition of social
democracy, consistently argues for a central role for government in the
regulation of markets and the provision of public goods’. Max Walsh comments: ‘That’s
a view that looks to be at odds with the deregulation and privatisation
initiatives of the Hawke-Keating years’.

Viewed in that context, it seems to me that the most likely outcome of Kevin Rudd’s recent promise to pursue microeconomic reform ‘with new urgency’ will be further
restriction of economic freedom and lower productivity growth.

Tuesday, July 9, 2013

This question has arisen from my reading of ‘The Great Famine’, by Ciarán Ó Murchadha.
But I have an interest in the question for two additional reasons: I have some
Irish ancestors who would have been affected by the great famine; and in the
course of my work as an economist I have developed a great deal of respect for 19th Century political economics.

I found Ó Muchadha’s book to be enlightening in explaining why
a substantial proportion of the Irish population were heavily dependent on
potatoes and highly vulnerable when crops were destroyed by a fungal disease in
most of the years from 1845 to 1849. Prior to the famine, about one-third of the
population was completely dependent on potatoes because no other crop could
provide as much nutritional value from small plots of land. Over 600,000 households
subsisted without tenure rights on small plots of land under the conacre system,
which gave them access to land in exchange for their labour. A further 300, 000
cottier households had a more formal tenancy relationship which entailed
working for set wages, which were offset against the rent for their plots. Many
tenants on small holdings paid their rents in cash rather than by providing
labour, but were also completely dependent on potatoes for subsistence.

In the decades leading up to 1845, access to land for
potato-growing was becoming more difficult, partly because of an increasing
tendency for landowners to consolidate holdings for grazing purposes. In their
struggle to obtain access to land it had apparently become common for poor
people to offer more rent than they could possibly pay, in the hope that once
possession was obtained it would be less bothersome for landlords to reduce
rents than to initiate eviction proceedings. The transactions costs associated
with evictions were often substantial. Tenants had a set of ‘tradition-sanctioned’
modes of proceeding under cover of darkness against people whom they believed
to be perpetrators of injustice.

Such secret society activity did not persist after 1847,
however. By that time, those who would
have been likely to exact retribution for evictions were apparently ‘for the
most part dead, in the workhouses, in prison or had departed overseas as
emigrants or as transported felons’. The famine added impetus to the number of
evictions, not just because many tenants were unable to pay rent, but also
because landlords anticipated that their rates would rise dramatically to pay for
relief under the Poor Law. Evictions would have substantially increased the
death toll from the famine, but from a landlord’s perspective, consolidation of
holdings was necessary in order to avoid bankruptcy.

The relief provided by voluntary contributions and the British
government was not sufficient to prevent over a million deaths occurring during
the famine period. The British Treasury spent about £8 million on famine relief
in Ireland, much of which consisted of advances that were intended to be
repaid. The government’s contribution was relatively small by comparison, for
example, with the £69 million spent on the Crimean War of 1854-1856. The government
could have done more to help the Irish without causing much hardship within
Britain.

So, why didn’t the British government provide more help to
the victims of the Irish famine? The explanation offered by the author is as
follows:

‘Political economy … combined with ‘providentialist’ and
‘moralist’ views, provided the assumptions underlying the decision-making of
the small London-based political elite whose views translated into legislation
for Ireland, and none of whom ever witnessed its effects first hand’ (page 194).

However, that doesn’t line up well with what I know about
the views of prominent 19th Century political economists. For
example, in discussing the limits of laissez faire in his book ‘Principles of Political Economy’, published
in 1948, J S Mill wrote:

‘Apart from any metaphysical considerations respecting the
foundation of morals or of the social union, it will be admitted to be right
that human beings should help one another; and the more so, in proportion to
the urgency of the need: and none needs help so urgently as one who is
starving. The claim to help, therefore, created by destitution, is one of the
strongest which can exist; and there is prima facie the amplest reason for
making the relief of so extreme an exigency as certain to those who require it,
as by any arrangements of society it can be made.’

Ciarán Ó Murchadha implies that his view is based on
research by Peter Gray, which demonstrates

‘that the ideological
framework was part of a wider set of beliefs shared across the British
political spectrum, including the conviction that the Famine had been sent by
providence, and that it furnished the British state with both the opportunity
and the moral authority to reform Ireland thoroughly’.

‘a readiness to attribute mass famine mortality in Ireland
to the wilful immorality of the Irish, and to insist on the implementation of
the penal mechanism of the poor law on all social classes’.

Immediately afterwards, Gray adds:

‘This, rather than any unthinking adherence to “laissez
faire” is what informed the doctrine of “natural causes” in the latter stages
of the Irish famine’ (IEHC 2006 Helsinki Session 123).

It seems to me that British views relating to providence and
morality might have been advanced by English people to avoid acknowledging that
they did not feel much sympathy for starving people in Ireland. In his book, ‘Why Ireland Starved’ (1983) Joel Mokyr
suggests:

‘It is not unreasonable to surmise that had anything like the famine occurred in England
or Wales, the British government would have overcome its theoretical scruples and would
have come to the rescue of the starving at a much larger scale. Ireland was not considered
part of the British community. Had it been, its income per capita may not have been
much higher, perhaps, but mass starvation due to a subsistence crisis would have been
averted …’ (p 292).

Even though Britain and Ireland were part of a political union,
there are strong historical reasons why many British and Irish people did not
see each other as members of the same community. There is evidence that British
political economists, including J S Mill, shared the prejudices against the
Irish of many other British people. But the principles of political economy espoused
by 19th Century political economists did not require the British
government to allow large numbers of people to die during the Irish famine.

Tuesday, July 2, 2013

In a recent post entitled ‘The importance of representative democracy’, my friend, Jim Belshaw, takes the Leader of the Opposition, Tony Abbott,
to task for saying that the Australian people elect the Prime Minister.

Jim writes:

‘They don't, nor should they if you want to maintain our
current system of Government’. Maybe you don't so, so present your alternative.

In our system, Parliament is the supreme being. Parliament
appoints the Prime Minister by awarding confidence. It is Parliament that
stands between us and the overbearing coercive power of Executive Government.’

It seems to me that while Jim is technically correct, it has
been unusual for party leaders to be deposed while their party is in
government. That has led to a situation where most people have tended to vote
for party leaders and perceptions of leadership have a massive influence on the
popularity of political parties. The recent lift in the Labor party’s electoral
prospects did not occur because of some radical change in the party’s policies.
It occurred because caucus elected a new leader.

As previously noted, I am pleased that the Labor caucus has
restored Kevin Rudd to the leadership and have given voters the opportunity to
vote against him. It does seem reasonable for voters to expect that the leader
of the party they vote into office will remain prime minister until they vote
him or her out of office. On the basis of Labor’s recent track record, however,
it also seems reasonable for voters to question how long Kevin Rudd will remain
prime minister if Labor is returned to government. Will Kevin Rudd again be replaced
by his deputy next time around? Could a vote for Kevin end up as a vote for
Albo?

Unfortunately for the line of argument Tony Abbott seems to
be running, the Liberal party also has recent form (in Victoria) in deposing an
elected leader while it is in government. And it is possible to imagine
circumstances arising where a vote for Tony might end up as a vote for Malcolm.
Some voters might view that as a good reason to vote Liberal!

What effect will it have on our system of government if it
becomes become more common for prime ministers to be deposed by their own
parties? I’m not sure. If it makes voters focus to a greater extent on policies
rather than the personalities of leaders that would be a good thing. However, I
don’t think that will happen. It seems more likely to attract attention to the
personalities of the leader’s rivals in his or her party and could lead to greater
political instability as those rivals seek to exploit their popularity with
voters. But it may also cause voters to pay more attention to the ability of
current leaders to work harmoniously with their rivals. People may become more
conscious that when they vote for clowns they end up with a circus.

I am broadly in agreement with Jim about the importance of
parliament and representative democracy. I don’t want to change the system. In
practice, however, I don’t think parliament does much to protect us from what
Jim describes as ‘the overbearing coercive power of Executive Government’.
Thank God that we also have a constitution, rule of law, regular elections, two
houses of parliament, and a federal system of government.

Another important merit of our representative system of democracy,
with single member electorates, is that it normally produces accountable
government. One party or stable coalition normally wins a majority of seats and
is able to form a government that usually lasts until the next election is
held. The elected government doesn’t have unlimited power to implement the
policies it is elected to pursue, but it can be held accountable for the
policies that it implements.

By contrast, when overall budgetary and regulatory outcomes
are the result of unstable alliances involving minor parties and independents,
voters have great difficulty in holding any party accountable.

Henry Lawson, a renowned Australian bush poet and story
teller, used that verse to begin his story, ‘Send Round the Hat’. The story is
based on his experience in the Bourke district of New South Wales in the early
1890s and would have been intended to be read mainly by Australian pastoral
workers.

I came to re-read the story a month or so ago when I was
asked to recommend some historical references for an Argentinian visitor who
was interested in the cultural tradition in rural Australia of people sticking
together and supporting each other in this vast harsh land. I suggested that
‘Send Round the Hat’ was excellent. The
comment that came back was: ‘Not necessarily that easy for an Argentinean to
understand!’

That response is fair enough. There are probably a lot of
Australians who would also struggle to understand English as it was spoken in
rural Australia in the 1890s.

Some people might
even struggle to understand the message of the poem quoted above. A person who
is ‘in a hole’ is in a difficult situation, often involving a financial
problem. To ‘pass round the hat’ is to ask people to donate money to help the
person concerned – traditionally, by asking them to place a contribution into a
hat. The message is to be kind to people who are in difficulty, irrespective of
their background.

The storyline is very simple. The author presents a series
of anecdotes to explain how Bob Brothers (more commonly known as the Giraffe or
Long-‘un because he was tall) has gained a reputation for passing around the
hat to help others. He tells us that Bob is always the first to make a
contribution when he passes around the hat and that he sometimes has to borrow
money in order to do this. The story ends with Bob’s friends stealing his hat and
passing it around to raise money to help him on his way back to Bendigo in
Victoria to marry the girl he loves.

The story is brought to life by Lawson’s description of the
characters involved and their attitudes. Most regard Bob Brothers as a
nuisance, or pretend to. One of the characters, Jack Mitchell, is even
permitted to suggest that Bob is ‘is one of those chaps that is always shoving
their noses into other people’s troubles’ because of ‘vulgar curiosity and selfishness’.
According to Jack’s theory, Bob makes his collections because he is ambitious
and likes public life.

Fairly early in the story, Lawson has Bob explain his
philosophy as follows:

"The feller as knows can battle around for
himself," he'd say. "But I always like to do what I can for a hard-up
stranger cove. I was a green-hand jackeroo once meself, and I know what it
is."

Bob was saying that he does what he can to help strangers in
need because he knows what it is like to be one. The ‘feller as knows’ would
have a great deal of local knowledge and networks to support him. A ‘hard-up
stranger cove’ is a stranger with little money. A green-hand jackeroo is an
inexperienced worker in the pastoral industry.

The main reason why I consider ‘Send Round the Hat’ to be
excellent is because Lawson is using the story as a gentle way to suggest to his
readers that kindness involves helping strangers as well as your mates (friends
and people you know well) and fellow members of trade unions, religions and
ethnic groups.

The anecdote that makes the point most strongly, in my view,
is the description of Bob’s attempt to take around the hat for the benefit of a
sick Afghan camel driver:

‘Some years before, camels and Afghan drivers had been
imported to the Bourke district; the camels did very well in the dry country,
they went right across country and carried everythink from sardines to
flooring-boards. And the teamsters loved the Afghans nearly as much as Sydney
furniture makers love the cheap Chinese in the same line. They love 'em even as
union shearers on strike love blacklegs brought up-country to take their
places.

Now the Giraffe was a good, straight unionist, but in cases
of sickness or trouble he was as apt to forget his unionism, as all bushmen
are, at all times (and for all time), to forget their creed. So, one evening,
the Giraffe blundered into the Carriers' Arms--of all places in the world--when
it was full of teamsters; he had his hat in his hand and some small silver and
coppers in it.

"I say, you fellers, there's a poor, sick Afghan in the
camp down there along the----"

A big, brawny bullock-driver took him firmly by the
shoulders, or, rather by the elbows, and ran him out before any damage was
done. The Giraffe took it as he took most things, good-humouredly; but, about
dusk, he was seen slipping down towards the Afghan camp with a billy of soup.’

The point being made was that Bob was even prepared to pass
the hat around among bullock-drivers - a notoriously tough and profane group - asking
them to make a contribution for the benefit of an economic competitor belonging
to a different religious and ethnic group.

‘Send Round the Hat’ might not be great literature, but it
makes some important points about the inclusiveness, or otherwise, of Australia’s
cultural heritage of supporting people in need. After re-reading it I am still
of the view that the tradition of passing around the hat has always been
largely about ‘looking after your mates’. However, I greatly admire Henry
Lawson’s attempt to promote higher ideals.

Emancipation

Welcome!

Welcome to Freedom and Flourishing. While you are here, why not take a look around and leave some comments.

There is a list of my most popular posts below. I am pleased that a post about characteristics of a good society, that I wrote in 2009, is still one of the most popular. That post captures some of the ideas about freedom and individual human flourishing that I think are most important.